About Me

Tuesday, November 30, 2010

One indicator of how free a country or society is, is the ease of mobility of its citizens to travel both within the country and abroad. The easier and less costly it is to move around, the more freedom the people have. On the contrary, the more bureaucratic and more costly it is to travel, the less free the people are. In short, mobility = freedom. Less mobility, less freedom.

To travel abroad, a Filipino needs (a) a Philippine passport, (b) a plane ticket, and (c) a valid visa of the destination country whenever it is needed. For many Asian economies like Hong Kong and member-states of the Association of Southeast Asian Nations (ASEAN), visas are not needed for visits of less than 30 days.

For Filipinos traveling abroad to attend a conference, to study, a business trip, or as tourists, they have to pay (a) travel tax of Php1,620 per passenger, and (b) airport terminal fee of Php750. Hence, even before one can board a plane, he has to shell out nearly Php2,400 already and it is not a small amount. Overseas Filipino workers (OFWs) are exempted from paying travel tax and also the terminal fee, I think.

Getting a new passport, whether for the first time or for renewal of the expired or expiring passport, can be costly. The cost of passport, the new machine readable passport (MRP), is Php500 for regular processing (released after 14 working days) and Php750 for fast/overtime processing (released after seven working days).

Other costs are (a) passport pictures, Php150 for six copies, definitely a monopolistic price, service provided by the Department of Foreign Affairs (DFA) multi-purpose cooperative; (b) securing birth and/or marriage certificates, other papers and clearance from other government agencies when necessary, and (c) taking a leave from office, first to get a schedule for application processing, and second, actual processing day, payment, data encoding, etc. Some people apply through their travel agents, and normal processing fee by the travel agencies is Php1,000 per passport, but the applicant still has to go to the DFA for the electronic signature and perhaps interview for first-time passport applicants.

Those long queues are stressful and costly for passport applicants. Long queues mean only one thing: the supplier of the service or a commodity is small or few relative to those who demand the service. In order to reduce, if not remove the long queue, the supplier should either expand the staffers who attend to the long lines of people, or expand the number of offices (or shops) in different places to attend to more people from more places.

Fastfood chains do that. Banks too, and malls and convenience stores, gasoline stations, repair shops, Internet shops, barber shops, and so on. All private enterprises operating in a competitive environment are stretching wide and hard to reach out to more people, to serve and satisfy more customers.

Why can’t the DFA and many government agencies follow that? If the current number of personnel is not enough, then DFA should rechannel some of its staff from other departments or divisions to help in the passport processing work; or hire more staff. If eight hours on 5 ½ days are not enough, then work 12 hours on six days per week. If the DFA building is not enough, then get or rent additional offices in other cities, both in Metro Manila and the provinces. Many DFA regional offices across the country are also experiencing long queues for passport applicants. There are additional costs for this expansion of offices and staff, definitely, but there are additional revenues too that can more than finance the additional expenses.

I suggested the re-channeling of some staff from other DFA offices and divisions because I have noticed that while the staff at the Passport Director’s Office and related offices working on passport issuance are harassed and seem to be overworked, the staff from neighboring rooms and offices at the DFA seem idle.

If the DFA cannot have the flexibility or will to expand its staff and/or offices, then it may consider allowing and accrediting some private travel agencies to process passport applications. Then the DFA main office can attend more to those applicants with special or urgent need for a passport.

Like my case. Last month, I was going to Atlanta, Georgia to attend the Atlas Liberty Forum. The sponsor paid for my hotel and subsidized my plane fare. Less than a week before my flight, my passport accidentally got wet; my travel agent advised me that I need to get a new one as my current passport might be declared “mutilated” and hence, invalid, by the immigration officers of the Philippines and the US.

With the help of some friends who have friends at the DFA, I was entertained at the Passport Director’s Office, where there is a long queue of people who may have the same urgent need for a new passport. Anyway, I had to cancel my original flight, got my new MRP after four working days, flew the following day, and caught up the conference on the day it started.

The high cost of getting a new passport plus travel tax and terminal fee constitute an indirect restriction to some people who maybe poor and desire to be more mobile across the country. The world is globalizing fast, and there are not too many opportunities in the country given the bad state of governance. Those unnecessary but indirect restrictions to people’s mobility should be reduced. The travel tax, for instance, looks like extortion since there are no corresponding services to the public who paid the tax. It should be abolished.
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Passport and People Mobility, Part 2

May 18, 2008

I circulated my article on “Passport, travel tax and people mobility” to some of my yahoogroups, got comments from 7 friends. Below are the summarized comments and my reply to them.

(1) From Prince:

I think the bigger issue with the slow processing of passport is not the number of staff but the equipment for the electronic signature and thumb mark. I assume the equipment is very expensive that is why the government cannot acquire more of it. Another issue there is an unusual increase in demand for passports with the issuance of machine-readable passports (MRP) Several people want a new MRP even if their current ones are not yet expired. Another problem that they need to look at is the number of fixers and unscrupulous people trying to exhort money from passport applicants near the DFA national office.

(2) From May:

This means poverty stricken countries will never be considered free. What’s the meaning of “free”? According to David Schwartz, if you believe you are free, you can be free.

(3) From Eunica:

The problem is in the system. I doubt if the size of the bureaucracy is the problem for I am sure that more than one of the employees there could be considered redundant. So I doubt if a Jollibee-and- Starbucks- type of expansion is the solution.

Subjecting it (DFA) to competition could be given a thought but only up to the point where some steps in the processing could be outsourced. But the nature of information handled by the particular agency could raise some important issues. Given the massive outflow of overseas workers and the rise of budget airlines, business related to this will be viable.

All those expenses and the pressure from predatory Customs officials that OFWs face are just too much and indeed need some drastic measures. Mobility matters to the middle class more than to other people whose major concern is meeting the basic needs that could tide them over a day. Hence, as a barometer of freedom, its application is limited.

(4) From Emir:

Why do we have to pay airport terminal fee anyway? Countries with much more modern terminals don’t even charge any fee. There was a time we used to pay for using those old luggage carts. If they were able t abolish the push cart fee, why not also the terminal fee. If the collection of the fee is for terminal maintenance, the money does not obviously go there. Our terminals are probably the oldest and the worst in Asia. Vietnam or even Cambodia (au naturelle) terminals are even more impressive. The low cost carrier terminal in KL is a lot better that terminal 2.

Whoever is managing the PAL terminal (NAIA 2), has not even heard of an invention called ESCALATORS. When you arrive via NAIA Terminal 2, you need to drag your carry-on luggage down the stairs towards the immigration counters. And you need to pay them P750 for the inconvenience?

(5) From John:

Why can’t the DFA make our passports expire in 10-years, so that we don’t go to them every 4 ½ years since we cannot travel anymore if our passport will expire in 6 months or less?

(6) From Jay:

The lines are long because many people need passports. Passports are needed because the places they want to go to require visas before they let them enter… Even if the government handed out passports for free, that still doesn't result in greater mobility because ultimately it is not the issuance of a passport, but the respective countries who decide whether you can go in or not.

In your conclusion you say that high passport costs "constitute an indirect restriction to some people who maybe poor and desire to be more mobile across the country." There is no connection. No one needs a passport to travel anywhere across the country.

Having traveled very extensively, I agree that there is something that needs to be done about the travel tax, costs of service, and efficiency. Far more efficient systems exist than what is currently in place at DFA, and given the number of people who need passports, it is proper to demand an accounting and better services for the money that is paid. But efficiency takes more than reducing taxes and increasing staff.

(7) From Jim:

For comparison, a U.S. Passport cost about $100 or Php 4,200 (for applicants over 16 years of age) and $85 or Php 3,570 (for applicants 16 years of age and younger). It generally takes about 4 weeks to process, but I know that in case of emergencies one can go directly to a Passport Processing office and get it the same day. So basically Philippines is a bargain compared to the U.S. But with a Philippine passport you'll need a visa to visit most countries, while with a U.S.
passport a lot of countries will allow entry with out a visa. I guess it all boils down to planning, if you know you're going somewhere a months ahead of time kuha ka na ng passport.

My reply to them:

(1) To Prince:

I think it's not with the machines. If it were so, the long queues would be in the passport release section, where people were waiting for 2, 3, or 4 weeks for their passport to be released. The long queues are in the processing, 1 or 2 days before the application forms will reach the machines that produce the MRP. And that is why the number of fixers cannot go down: they know that many people are stressed by the long lines, they want someone who can help them shorten the process, even if they have to pay a big premium.

If there's a long line for customers, fastfood chains open up a dozen more new stores/shops in different locations. The banks, gasoline stations, car repair shops, vulcanizing shops, barber shops, do the same. So why can't the DFA do it too? "Limited funding" cannot be the answer to this question because passports are not free, there's a fee to get it. DFA being a bureaucracy and a monopoly, it need not be too sensitive to the needs and frustrations of the citizens. Unlike private enterprises who are forced by circumstances to be sensitive to their customers; otherwise, the latter will simply go to other firms and suppliers of the same or similar commodities/ services.

Nonetheless, I have respect for the staff of the Passport Director's office. They were really over-worked and they work hard, I could see it. It's the staff of other offices within the DFA who are often idle.

(2) To May

As I defined it earlier, mobility = freedom. Less mobility, less freedom. And according to Friedrich Hayek, freedom = absence of coercion.

Poverty-stricken countries need to simplify and liberalize the issuance of passport for their citizens who want to escape their country and work/move somewhere else. Or their governments need to liberalize the entry of foreigners -- investors, tourists, professionals -- who want to come to their country, and these foreigners can help generate jobs for their people.

If you believe you are free, fine. You have the freedom to go to Kuala Lumpur or Bangkok tomorrow, fine. Assuming you already have the passport, and going to those cities is visa-free for visits of 30 days or less, there are lots of government-imposed costs: (a) travel tax, (b) terminal fee, (c) inspection fee, security fee, embedded in the plane ticket. Which makes your foreign travel more expensive than what it should be if some of those government-imposed costs are reduced or removed.

(3) To Eunica

The DFA is a big bureaucracy in charge with different political and economic diplomacy, trying to save some OFWs from being hanged in the Middle East, attending and organizing different summit (ASEAN, APEC, ASEM, Ministerial meetings, etc.), issuing RP visa to some foreigners coming in, and so on. Issuing passports is only one of its functions. And it is here where the DFA is sometimes getting the public's ire and frustration, instead of support and commendation.

When a government, like the Philippine govt., will impose many taxes and fees on each step, from getting a passport to getting an OFW permit at POEA, OWWA, Bu. of Immigration (if any), etc., including preliminary papers like NBI clearance, PNP clearance, brgy clearance, etc., that government is putting indirect hindrance to people mobility and their freedom to travel.

To correct such hindrance, the burden of proof that a person trying to travel abroad could be an "undesirable" citizen, should be shifted from the people to the government. Thus, instead of the person producing different clearances and permits from different government agencies (NBI, PNP, brgy, POEA, etc.), those agencies should reconcile their data and watch out only for those with some criminal records, all the rest should not be harassed and not be required to secure and pay those unnecessary clearances and fees.

(4) To Emir:

Tama Emir. The terminal fee should either be abolished, or be reduced by 1/2 at most. Airport operators like MIAA earn enough from (a) airlines, (b) rental from shops inside the airport terminals, (c) ads from billboards inside the terminal, (d) airport taxis and rent-a-cars, (e) parking fees, etc.

(5) To John:

I was also thinking that passport validity should be more than 5 years since its effective usefulness is only 4 ½ years. It could be made 6 to 10 years, so there will be less people that go there, which adds to longer lines of passport applicants.

(6) To Jay

Getting a visa is a privilege to be given by foreign governments, and it was not the subject of my paper. Rather, it was about the privilege to travel abroad to be given (or denied) by the Philippine government -- hence, my discussion on RP passport, travel tax, terminal fee, etc. And my beef was that the Philippine government should reduce some unnecessary hindrances to Filipinos desiring to be mobile abroad, like the abolition of travel tax, reduction of long lines for passport application, etc.

"Travel across the country" was a typographical error, my mistake. I meant "travel outside the country".

Increasing staff at DFA passport processing is only one of about 4 options I made. Another option is rechannel some staff in other DFA offices who I saw, were idle, just chatting and laughing in their offices while the passport-related staff were harassed and over-worked.

(7) To Jim:

Not exactly "bargain" the RP passport fee. A $100 can be earned in one day perhaps by a minimum wage earner in the US. A P4,200 can be earned in 2 weeks work by a minimum wage earner in the Philippines. Also, as I mentioned in my paper, you pay not only P750 passport fee, you also pay P150 for those small pictures alone, another P150 to P180 for "notarized" statement that your passport was lost due to theft or fire, or damaged due to water or fire or babies, etc.
Then you also have to take a leave for about 1day from your office to file the application form, processing, etc. If you don’t like long lines, you pay P1,000 to travel agencies to help you, but you still have to go to DFA for e-signature, etc. You also pay sometimes for NBI clearance, PNP clearance, plus birth certificate, marriage certificate, etc. to NSO. DFA gets the original copy, not photocopy. You sum up everything, you could be near P4,000.

Sometimes you cannot just "plan" your trip. You have no money to be a tourist abroad, neither you want to work abroad, you don’t apply for a passport. Suddenly a relative will tour you to HK or Bangkok for free, or you get an all-expenses paid conference, you run to the DFA.

This is the Moon Palace Hotel in Cancun, Mexico, where thousands of climate officials, bureaucrats, environmentalist NGO leaders, media, and others started meeting since yesterday up to December 10, 2010. Huge and extravagant, there should be several tons of carbon emission and global warming molecules that the participants should leave in order to fight man-made warming.

Moon Palace Hotel should be one of the showcases of Cancun capitalism. Capitalism, profit motive, extravagant lifestyle by the super-rich and super-bureaucrats, are alive and well in this beautiful resort.

The planet is burning and getting warmer and warmer, so saviours of the planet should refresh themselves and plunge into these nice and luxurious swimming pools of the hotel. Then they can resume inventing new environmental regulations and new energy taxation to fight "man-made warming." Government and UN climate bureaucrats of course won't pay for this luxurious hotel out of their own pockets. It's taxpayers from many countries who will shoulder the bill, who else.

How costly are these meetings? Here are some data: Cancun conference, 2010: cost about 841 million Mexican pesos ($67.33 million) to the Mexican government. Copenhagen summit, 2009: the Danish finance ministry said total costs were about 1.2 billion Danish Krone ($213.3 million). Bills of delegates not included yet.

Estimated number of participants: Cancun, 2010: Mexican authorities expect up to 22,000 people, including 9,000 official delegates plus journalists, environmentalists and others.Copenhagen, 2009: more than 45,000 delegates and observers. Data from The Telegraph

Climate Socialism

The opening program of the UN FCCC 16th Conference of Parties (COP 16) meeting yesterday. Some warming scientists painted even worse scenario of man-made warming there. Here's one report from The Telegraph:

In one paper Professor Kevin Anderson, Director of the Tyndall Centre for Climate Change Research, said the only way to reduce global emissions enough, while allowing the poor nations to continue to grow, is to halt economic growth in the rich world over the next twenty years... “The Second World War and the concept of rationing is something we need to seriously consider if we are to address the scale of the problem we face,” he said."

The ultimate goal of so-called "climate science" remains the same: more environmental regulations, more energy taxation, more climate bureaucracies, more global climate meetings, by governments and the UN. It is a grand project towards what Pres. Vaclav Klaus of Czech Republic calls as "global ecological central planning."

And just how effective was Kyotoism in fighting "man-made warming"? Here's one summary, from The Hockey Schtick,

Meanwhile, the warming-cooling-warming-cooling climate cycle of planet Earth now points towards global cooling, not warming. This is seen from the PDO index until this month. Graph source is http://www1.ncdc.noaa.gov/pub/data/cmb/teleconnections/pdo-f-pg.gif Where is the causality between more CO2 emission (and "more warming") and the plunge in global temperature?

Yesterday, UK was blanketed by thick snow. The severe cold that descended at the Northern Hemisphere from the Arctic has thrown many European countries into deep freeze. Sweden for instance suffered up to -36 C severe cold last week.

1.What for you were the major political developments at the national and the international arena for the last 30 years?2.Why were those events significant?3.What was your most significant direct political experience / activity?4. How would you asses our current political situation and our political system?

I sent a quick reply to her. The version below though, is a bit longer than the one I sent her. The various pictures and logo shown here are taken from the web, various sources.

1.What were the major political developments at the national and the international arena for the last 30 years?

A. International:

a) Fall of the Berlin Wall and collapse of communism in Europe.

b) "Marketization" of China and the growth of China as the world's 2nd largest economy this year, over-taking Japan.

c) Birth of WTO and rules-based international trade among member-countries.

d) Piecemeal collapse of the welfare system in rich countries with a series of recent financial crisis in the US, Greece, Ireland, and soon Spain and Portugal.

f) People power (or "Edsa 1") revolution of 1986 and the collapse of a 20 yrs Marcos dictatorship.

g) Abuse of people power revolution with "Edsa 2" then "Edsa 3" in 2001, endless military coup d etat attempts since 1987.

h) A protectionist and nationalist 1987 Constitution.

i) Persistence of the communist insurgency when such movement has been routed in the rest of SouthEast Asia already.

j) RP becoming the world's 12th biggest country in population size.

2.Why were those events significant?

a) Collapse of the Berlin Wall and communism in Europe resulted in huge resources freed from war economy to political unification and more economic growth in that continent. With globalization, major economic growth in one continent or a big country will have positive economic effect for the rest of the world. A rich economy imports more (exporting countries are happy), sends foreign investments abroad more and its people are travelling abroad as tourists (host economies are happy). Or a rich and expanding economy hires more foreign workers.

b) China's transition to a market economy despite its socialist political structure provided the huge economic stimulus for many other Asian economies who exports a lot to China. It also drove down global inflation to low levels as China began exporting very cheap products worldwide.

c) WTO affirmed the fact that free trade produces more benefits than costs, that there is "net gains" (advantages are larger than disadvantages). But protectionist interests in many countries will simply not go away easily. Multelateral trade negotiations via WTO are seen to be slow, so many countries prefer regional and bilateral trade liberalization.

d) Many welfare states have started cutting back on expensive welfare, cutting the size of government personnel, raising the mandatory retirement age, forced to borrow less to reduce ever-rising public debt, and so on. They are beginning to realize the importance of giving more "personal and parental responsibility" to people to run their own lives, that there is big limit to more "government responsibility."

e) Man-made warming (or anthropogenic global warming, AGW) scam was the most organized scientific fraud in human history. Too much world resources were wasted -- creation of so many climate bureaucracies from the local governments to national and multilateral levels; so many environmental regulations, energy taxes, were created; so many expensive global climate meetings were held.

f) Rediscovery by Filipinos of the value of fighting for democracy, of standing up for freedom. Edsa 1 people power revolution was a national rejuvenation, even if short-lived, of Filipinos being proud of their citizenship.

g) Realization that extra-constitutional ways of political change will be abused and re-abused. That we need to promulgate the rule of law and constitutional provisions in regime changes. Government really attracts lots of social "saviours", from politicians to NGOs to communist rebels to military rebels. All of them do not criticize the big government, they all support it, they just want to control or minimize corruption in big government set-up.

h) Restrictions on foreign investments into the country via the 60-40 equity limitations, long "negative list" of sectors and subsectors that foreign investments and businesses cannot enter. Also a long list of professions that foreign professionals cannot practice in the Philippines. Filipino nurses and doctors can practice in the US, Europe, Japan, etc. but foreign nurses and doctors cannot practice here. Clear case of hypocrisy and double standard in the Constitution.

i) Persistence of the communist movement in the Philippines via the CPP-NPA and their various front organizations and party-list groups shows that people have not yet learned from the evils of one-party political dictatorship, economic central planning, as seen from the collapse of communism in Europe.

j) With 94 million people (2010) and moving fast to reach 100 million within 4 years or less -- implies increasing demand for public services, more OFW remittances, more economic expansion due to ever-rising household consumption.

3.What was your most significant direct political experience / activity?

a) Advancing the philosophy of more individual freedom, more free market philosophy and public policy, less government, less taxes, less regulations.

b) Contribute to public education that more personal and parental responsibility in running our own lives will produce a more peaceful society, a more dynamic economy, compared to "more government responsibility, regulation, taxation and intervention".

c) Contribute to climate rationality that the planet is not in "crisis", that it does not need politicians and climate bureaucrats to "save the planet." We are simply experiencing climate cycles of warming-cooling-warming-cooling due to natural factors (the Sun, volcanoes, oceans, water vapor and clouds, GCRs, natural GHGs, etc.)

4. How would you asses our current political situation and our political system?

a) Too many political parties, too many politicians, too many political groups and commentators. We need less political parties, few but big political parties which have clear and distinct political ideologies. The socialists and nationalists should explicitly divulge their political ideology, the liberals and the anti-socialists should explicitly declare their adherence to individual freedom and free market principles and not just "good governance/anti-corruption" sloganeering.

b) The party-list system should be abolished. Each pol party representing one important political ideology is enough. Multi-party and multi-philosophy is not possible, they just want to be in govt and get billions of pesos in tax money for their own pork barrel and sectoral nepotism.

Monday, November 29, 2010

The Wikileaks, confidental cables and other information from the US government focusing on its foreign policy, including war policy, is one more testament of the evils of BIG government.

The Wikileaks detail how various governments including the US, discuss if not plan how to subvert the others, or stop the subversion, among others. When bureaucracies, especially the military establishment in many governments become too big, there are just too many communications, useful or useless, that are floating around.

Spying is no longer a monopoly by governments. It is good that there is some "balance of terror" between government spies and private spies. Secret communications by private individuals can be detected by government spies, but secret documents and communications by government offices can also be detected, if not stolen, by private spies. The latter may be doing it for money or some political agenda, but other private spies may be doing it out of curiosity, or just for fun.

The biggest losers of the Wikileaks that are being reported in big media outlets, discussed and reposted in millions of blogs around the world, are the government agencies that are named or identified which have some damning or ugly messages, like plans to allow and aid terrorism, or invasion.

And we taxpayers of the world, we just keep paying and sustaining those huge bureaucracies that contribute little or nothing to producing society's needs like more food, more school buildings and books. But agencies that just keep spying on us, for instance.

Government is coercion. Some coercion are useful, like coercing people not to put justice in their own hands by killing or physically harming other people. But most coercion are useless and counter-productive.

The UK Meteorological Office is notable for its "barbeque summer" and "mild winter" forecasts. And its batting average of correct forecast for the last 3 years or more has been zero. Since 2007 or 2008, it predicted a "barbeque summer" and for the past 3 summer, it's been a generally rainy summer. The Wimbledon tennis the past few years for instance, suffered several games delay because of the rains. They have built a slightly enclosed tennis court because of the frequent rains during the games.

Just last month, the UK Met Office again predicted a "mild winter" forecast. As of last week, UK was battling early snow and temperature drops of up to 7.6 C. And yesterday, UK was freezing with -10 C and 15 inches of snow, http://www.dailymail.co.uk/news/article-1333655/Police-warn-Britons-stay-roads-temperatures-fall-10C-15-inches-snow.html#ixzz0gBUuBgA5.

UK's climate officials and bureaucrats now in Cancun, Mexico for the UN FCCC meeting, would be ashamed should they make pronouncements like "more environmental regulations and taxation to fight man-made warming" as UK and the rest of the Northern Hemisphere are freezing with severe cold. And it's only November. It's not yet January.

Saturday, November 27, 2010

The US government's Transportation Security Administration (TSA) has become the butt of jokes for a number of bloggers recently. The reason is the groping practices, physically-invasive pat-down check-up of plane passengers. Cartoons are among the funniest satire, like this one.

Someone commented that perhaps the Internal Revenue Service (IRS) would be jealous at the amount of public attention that the TSA is getting recently.

If the words in these shirts are not clear, here's what they say. Man's shirt: "Your naked photos are safe with us." And the girl's shirt: "We're making air travel a touching experience." Hahaha! Btway, these 2 cartoons I got from Dan Mitchell's blog, http://danieljmitchell.wordpress.com/

Ahh, this one's more brutal. I got this from Froilan Bersamina's blog.

Now, will the TSA people mark bloggers who make fun of them? Most TSA guys that I saw when I travel to the US don't look too intrusive. Most are courteous and friendly. Or maybe the much stricter pat-down screening was done only recently?

This is not to say that those countries are PIGS. It is simply an acronym for the four economically problematique countries in Europe now. And this short post is about excess pork -- represented by high budget deficit, spending beyond their means -- in those countries.

Some macroeconomic data here on the four and other countries. Data is from The Economist, November 25, 2010 issue.

A. Budget deficit, 2010 (percent of GDP)

Ireland, -37.0% (!!!)Spain, -9.7%Greece, -8.5%Portugal, -7.4%

Compared to other rich countries that are not in crisis situation yet, the figures above (except that of Ireland) do not differ much:

Friday, November 26, 2010

Government is coercion. It is one characteristic of government – local, national, multilateral – that is not found in other private and voluntary institutions. And since government has the monopoly of force, legal, political and armed force, it tends to force its way to the detriment of individual liberty.

Forecasting climate and making stringent environmental, energy and taxation policies to “fight man-made warming and climate change” and to “save the planet” are major areas where government coercion is becoming clearer.

The UN Framework Convention on Climate Change (UN FCCC) COP 16 meeting will start next week in Cancun, Mexico. The collapse of the COP 15 meeting in Copenhagen last year, which experienced a bitter blizzard for an event to “fight global warming”, was bad for the thousands of climate bureaucrats around the world.

So this time, they want to see some “concrete results” of drastic carbon emission cuts from the rich countries, several hundred billion dollars in climate money transfer from the rich to the poorer countries, and various schemes of global ecological central planning. How will they do that?

United Nations leaders will demand ‘concrete results’ from the looming Cancun climate summit as global warming is accelerating, a top UN organizer of the event said Monday. Robert Orr, UN under secretary general for planning, said the next Intergovernmental Panel on Climate Change report on global warming will be much worse than the last one.

They are referring to the UN IPCC 5th Assessment Report (AR5) that will come out in the next few years. The IPCC AR4 was released in November 2007.

Take note of the warning, “much worse than the last one.” Wow! The conclusion has already been made – ahead of the “scientific” findings that will follow a few years from now. This is similar to the IPCC AR4. The “Summary for Policy Makers” (SPM) was released in February 2007 while the actual and main report, the IPCC AR4, was released in November 2007. The conclusion and recommendations came ahead of the actual report!

And just how bad was the last one – the IPCC AR4? Below is a table from that report. Estimated radiative forcing from all sources that contributed to global warming in the past.

Of the nine factors identified by the IPCC, eight were anthropogenic or caused by man, while only one was natural, the Sun. The estimated solar forcing was insignificant, only about 0.12 watts per square meter, versus 1.6 watts per square meter for anthropogenic sources.

Ask the IPCC scientists: Why a minuscule solar forcing? What about clouds and water vapor, the oceans (Pacific Decadal Oscillation or PDO and Atlantic Multidecadal Oscillation or AMO), volcanoes, the galactic cosmic rays (GCRs) from exploding stars in the universe, the jet stream, and other natural factors? Mt. Pinatubo’s eruption in 1991 alone contributed to global cooling by up to 0.4 C until 1993.

The world’s climate has been on a cycle, warming-cooling-warming-cooling. Global warming is true, it happened in the past; the same way that global cooling is also true, it happened in the past – and is happening now. See for instance the latest sea surface temperature (SST) anomaly (or “deviation from the average”) for Nino region 3.4, the largest region in the Pacific Ocean, as of November 21, 2010. Data gathered from http://www.bom.gov.au/climate/enso/indices.html.

See also the extreme cold forecast for Europe this week and next week,

The IPCC remains true to its color. It is not a scientific body – rather, it is a government and politicial body. That is why it is called “intergovernmental panel” That is why the head of IPCC, Mr. Pachauri, is not a scientist but an economist. That is why the IPCC and Al Gore the politician almost always have the same messages of climate alarmism and the need for more environmental regulations, more carbon and energy taxation, more climate bureaucracies and more global climate meetings.

Government is coercion. Political science, more than climate science, dictate climate and environmental policies. Their notorious political agenda will proceed.

As the Northern Hemisphere is shivering with severe cold, as the Philippines and other tropical countries are mired in daily cloudy skies and occasional heavy rains and flooding, we are made to believe that these are still evidence of “man-made warming and climate change.” Heads they win, Tails we lose.

(Note: I entitled this piece as "Tax competition 1" because I intend to write more papers on tax policies, especially on income tax, by other countries).

Ireland maybe economically wobbling now because of the huge debt it is facing, and some cut in the welfare system that will be needed to reduce the debt and the budget deficit. But it has long term stability resting on a low income tax policy, which attracts huge businesses, employing tens of thousands of workers and exporting tens of billions of dollars yearly.

Ireland's corporate income tax rate is only 12.5 percent, among the lowest in Europe, like Russia's 13 percent, 12 percent by Belarus and Georgia, 10 percent by Albania, Bulgaria, Serbia and Macedonia. Huge European economies like France, Germany and UK, those which have high income tax rates, are envious if not angry, at Ireland's low corporate income tax as it causes "unfair" tax competition with them.

To blame Ireland's low income tax policy as among the "main causes" of the crisis is wrong. It was the spend and spend policy of the current administration. This graph shows why: by 2007, as revenues started falling, expenditures keep rising. That's clear fiscal irresponsibility. Graph source is The Road we Travelled by Dr. Gurdgiev.

Ireland’s corporate tax policy has lured many multinationals, from drug companies like Pfizer and Forest Laboratories, to technology titans like Google and, more recently Facebook and LinkedIn.

Together, they employ more than a quarter million people in the country, and account for about 70 percent of exports.

Pfizer, which has been in Ireland for decades, is among the many multinationals monitoring the tax debate. “When you’re a company like Pfizer, you make billions of dollars of investments for the long term because Ireland has provided certainty” about the tax rate, said Mr. Duffy, the vice president. “When you start to mess with that, you raise issues of trust” that could cause some companies to reconsider the wisdom of investing in Ireland, he said.

Right there! Low income taxes are incentives to businesses, which create jobs, which earn huge revenues and exports, which pay various consumption taxes (sales tax or VAT, property tax, and so on). So a low income tax rate does not mean low overall tax revenue. It can be the opposite as more business locators in the economy pay other taxes aside from income tax.

Thus, Ireland must keep its low corporate income tax rate. It must resist "suggestions" from EU politicians, especially those from Germany, France and Belgium, to tinker that rate upwards to finance the bail-out money from the EU and the IMF.

This is a lesson for all economies in the world, rich and poor alike. You do not penalize work and entrepreneurship with high income confiscation in the form of high income tax rates. High income tax rates result in either situation: (a) businesses do not go there, or (b) businesses try to pay lower income taxes by utilizing various loopholes, if not outright bribery of government tax bureaucrats. In many poorer economies, many tax bureaucrats actually directly solicit bribes in exchange for lower tax payment by corporations and individuals.

Tax competition drives dynamic economies Hong Kong and Singapore to keep humming. The number of countries that have adopted the low, flat income tax policy is also rising.

I went to Sweden and attended a seven-weeks training on "Sustainable Agriculture in an Environmental Perspective", from September to mid-October 2003. The traiing was in Svalov, while our hotel was in Lund, near Malmo, southern Sweden. We also visited Stockholm and Uppsala. Oopss, the picture here is not in Sweden, but in a glacier in Austria. I visited my German friend in Bavaria in Nov. 2008 after my other training in Gummersbach, and my German friend brought me to Austria.

Here in the Philippines, we have cloudy sky almost everyday, and often raining in the afternoon to evening. My friend in Jakarta said it's also raining there almost everyday.

More proof that the Earth is entering global cooling, not warming. And this will last for the next 2 decades or more, according to some solar physicists. And CO2 and human carbon emission has little or nothing to do with the Earth's climate cycles of warming-cooling-warming-cooling.

Fiscal irresponsibility, like personal and corporate irresponsibility, is wrong. Governments and individuals should live within their means, whenever possible. When income and revenues are low, then expenditures should also be kept modest. When income and revenues increase, then it is desirable and understandable to also increase spending. But borrowings should be kept to the minimum, preferably on emergencies only. Debt addiction as a habitual policy should be avoided.

The Ireland government has finally accepted bail-out money from its European Union partners and the IMF, some $114 billion. There are strings attached, of course. Foremost of which are the huge cutback in spending, especially on its generous and expensive welfare system, cutting the number of government personnel, and the ugly task of increasing taxes.

Ireland is a small country, population only 4.5 million. But it is also among the world's richest countries in terms of per capita income, nearly $40,000 per person per year. Currently, it has a high unemployment rate of 13.4 percent of the active labor force.

The country has produced some top notch rock stars like U2 and Bono. Bono figures prominently in "more foreign aid to developing world" and "Make poverty history" campaigns, via more taxes in rich countries and siphon off a part of it as foreign aid to the often corrupt governments of poor countries. But I digress.

The austerity plan calls for cuts of nearly 15 percent in Ireland’s social welfare budget... saving $4 billion a year. Some 24,750 public jobs... would be eliminated, cutting state payrolls down to about what they were in 2005 and saving about $1.6 billion a year. Child benefits and other social welfare payments would be reduced, and the nation’s minimum wage, now 8.65 euros, or $11.59, an hour, would be cut by 1 euro, or about $1.34....

Ireland’s tax net would be widened to take in some low-income workers who currently pay no tax, and a series of new taxes would be imposed on certain residential properties, as well as on 120,000 people who receive public sector pensions.... cut spending on health care by over $1.9 billion through a series of measures that are likely to push up the cost of private health insurance.... education programs will nonetheless take a hit starting next year, as more than $66.7 million is cut from the four-year budget.

Prime Minister Brian Cowen outlined €10 billion in spending cuts and €5 billion of tax increases over four years to reduce a budget deficit that is expected to hit 32% of the country's gross domestic product this year—10 times the euro-zone limit...

Irish officials pledged to maintain the country's low 12.5% rate of corporate tax, a linchpin of Ireland's economy for decades. However, they said value-added tax would rise one percentage point to 22% in 2013, while some €2 billion would be raised by reducing tax breaks for pensioners and broadening the number of Irish who pay personal income taxes.

Ireland's Prime Minister Brian Cowen, middle, flanked by the country's Finance and Environment Ministers, will definitely feel the heat of public protests and opposition. Unless he promised to do the things that his government will do now during the election campaign.

To avoid such drastic measures of reducing welfare and increasing taxes, fiscal irresponsibility should be avoided in the first place. Don't promise or give too much welfare and subsidies as it will only encourage people to demand more welfare. Like government paying people generous allowances if they do not have work. People usually can fend for themselves if they just work and save for the rainy days. No need to run to the government to expect various subsidies.

After Greece just a few months ago, now Ireland. And tomorrow, Spain and Portugal. And after that, more European countries that already show cracks in their expensive welfare system by having public debts that are at least 80 percent of their GDP and running budget deficit every year.

More foreign aid, including climate aid, will definitely be affected too. Will Bono and Bob Geldoff launch another round of rock concerts to push for "more foreign aid"?

Tuesday, November 23, 2010

Today, the North and South Korean military traded artillery fires, with at least 3 dead in the south, a soldier and two civilians. There were also unconfirmed reports that the South has sent some fighter planes to the North. Here's one report from the NYT.

North Korea's communist government wants an even bigger communist territory. Dictators want a bigger number of people to enslave. This is one big malady of communism and BIG governments.

South Korea's democratic government does not need additional territory to conquer. Hundreds of big S. Korean corporations -- producing telecomms and electronics/appliances to cars, ships and consumer products -- are successful in putting up branches and offices in many countries around the world. The S. Korean people are free to travel and migrate to many countries around the world.

The N. Korean people and state-owned corporations do not have that privilege. The N. Korean government's concept of any expansion is only via military occupation of the south, ultimately.

How short are the N. Koreans? This picture of a N. Korean spy beside an American (left) and S. Korean (right) soldiers provide somehow an answer. When people are starving or are not eating enough, they tend to become shorter, smaller, if not become outright malnourished.

Meanwhile, what could be the solution to the N-S. Korean conflict? Not a war, as much as possible. They went to war in 1950-53 already, and both sides lost. A serious war, should it happen between the two, will however, result in a lopsided loss to the North given the level of economic and technological advancement of the South. But still, a war is a war and millions of Koreans on both sides will die, a prospect that is not acceptable and tolerable.

I am not familiar about the politics and the various international diplomacy options in the Korean peninsula. Nonetheless, I still hope that a serious war will be averted. I'd like to see a "Fall of the Berlin Wall" type of democratization in N. Korea.
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Update: November 24, 2010

The exchange of artillery fire between North and South Korean army seemed to have eased, but the tension remains. The South's fighter planes did not fly yesterday but they were ready to fly and pound Northern targets. See the NYT report here. It should be safe to assume that the North's fighter jets were also ready to fly and attack then. It is good that no further escalation of the conflict happened, and it should not happen as much as possible.

Before the shooting yesterday, the major clash between the two Koreas was the sinking of a S. Korean warship Cheonan last March. The North denied that it was them who torpedoed and sank the ship, resulting in the death of all sailors in the ship, but there was no other possible reason to explain the sinking.

Prior to the shooting yesterday, the North was warming up to the South, especially after a huge flooding that affected the North in early September this year. The North asked for food and other supplies. It also initiated some moves that tended to divert the public's attention away from the sinking of the S. Korean ship. And suddenly, the shooting started between the two sides.

One of our friends in the free market movement in the world is the Center for Free Enterprise (CFE, http://eng.cfe.org) based in Seoul, S.Korea. Its President, Dr. Chung-ho Kim, is a good friend of mine since 2005.

Our picture here during the Atlas round table discussion on Friedrich Hayek's book, "The Constitution of Liberty", held in Phuket, Thailand, September 2005. From left: Dr. Hiroshi of the Institute for Free Economy, Japan; me, Chung-ho, and Mr. You of the Japanese for Tax Reforms.

Last November 9-10, 2009, Chung-ho and I were among the Asian free market delegates to the Atlas Freedom Dinner and conference held in Mayflower Rennaisance Hotel, Washington DC. The event was the commemoration of the 20th year of the Fall of the Berlin Wall, the collapse of communism in Europe.

Chung-ho was one of two freedom fighters who gave the "Toast to Freedom" that night witnessed by more than 300 people. Chung-ho said something like this.

In Berlin, they had the wall that separated West and East Germany then. When former US President Ronald Reagan went to Europe in the late 90s, he told Mr. Gorbachev of Russia, "Mr. Gorbachev, tear down the wall."

In Korea, it's not a wall, it's a fence, that separates North and South Korea. As President of the Center for Free Enterprise in S. Korea, I urge Mr. Kim Jong Il of North Korea, "Mr. Kim, tear down the fence. Let your people enjoy freedom and democracy. Let the people of the two Koreas be reunited."

Chung-ho received a long standing ovation for his short but emphatic statement.

With the recent development in the Korean Peninsula, it seems far out that a peaceful reunification of the two Koreas, similar to the reunification of the two Germanys after the fall of the Berlin Wall in November 1989, would happen soon. Such belligerence destroys whatever confidence building that were started in the past.

You don't build confidence by sinking a war ship for no reason at all and making not a single apology after that. You don't build confidence and trust by firing artilleries. You don't build confidence by bragging that you have plenty of centrifuges for your nuclear arms build up.

Communism and statism sucks. This should be a constant and painful reminder to people who harbor that socialism or communism is the way to "humanize the world."
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2 comments:

Governments have killed well over 200 million people in the 20th century alone according to statistician RJ Rummel. North Korean socialism would probably have already have collapsed if not for the foreign aid they get from stupid Western governments who are threatened by North Korea's military force. History has proven that the best way to take out communist regimes is to leave them alone.

Thanks FFF. On the other hand, the continued existence of N. Korea is a daily reminder to socialists and socialism-leaning people in democratic countries the ugliness and stupidity of a socialist country. We just wonder why they remain enamored to the ideals of socialism, of state ownership of the means of production, of killing the profit motive.

Today will be the 1st year anniversary of the heinous "Maguindanao massacre" where 57 people were killed in close range, in broad daylight, by the Ampatuan clan of Maguindanao province. The victims were the family members of a rival but smaller political clan of the Ampatuans, the Mangudadatu, their friends, members of media who accompanied the group, and some hapless civilians who just happened to pass by.

That news was so gruesome, so sick, it was picked up by the international media. A number of my friends from the US, like good friends from Atlas then like Jo Kwong, immediately wrote to me to ask if I was alright as some international media reports did not specify that the massacre occured several hundred kilometers south of Metro Manila.

This was my reply to them, 3 days after the massacre:

Hi Jo and all,

Thanks for the note. The massacre happened in Maguindanao province, in the southern island of Mindanao. It's far from Manila, so we are ok.

It's pure rule of men, zero rule of law. The perpetrators, the Ampatuan family, are an "untouchable" political clan in the province. The governor ran unopposed, his 1 or 2 sons are mayors of other municipalities in the province.

The President has big political debts to that clan because the latter cheated super big time in the last 2007 elections and delivered all the votes for the administration. For instance, that province delivered 12-0, meaning all 12 Senatorial candidates of the administration won, whereas in the overall result, only about 4 administration senatorial candidates ultimately won.

So 4 days after the massacre, 57 bodies so far recovered, there should be more, 18 were media people. Some victims were tortured. For instance, the wife of the politician intending to run for governor and challenge the Ampatuan clan, was severely tortured. Pardon the graphics but this is how barbaric those thugs are: They slashed her organ several times, slashed her breasts, gouged her eyes, shot her mouth and head, chopped the feet, etc. The sister and niece of the potential candidate suffered tortures as well, before they were killed.

A group of innocent motorists who were unlucky to be following the 5-cars convoy of the victims by just a few minutes, were also killed. One car contained all employees of a municipal hall in the nearby town.

So far, not a single arrest was made! Not a single arrest warrant was issued! Despite the fact that there should be several dozen armed men who commited the massacre, including local policemen and local militias. Despite the fact that a provincial backhoe was used and left on the graveyard.

The 57 bodies plus at least 3 vehicles were buried deep in an isolated place using a backhoe owned by the province, with the name of the provincial governor, Mr. Ampatuan, boldly painted in it. When the army came looking for the missing convoy, the operators of the backhoe and the armed men fled.

Almost everyone here in the Philippines is angry, especially the media. The Federation of Intl Journalists has declared yesterday that in terms of threat to media and casualty of media people, Philippines is now 1st, Iraq is 2nd.

A few weeks after the massacre, Mr. Andal Ampatuan, the main suspect as the one who ordered the massacre, the son of the Governor then, and purported to run for Governor to replace his father whose 3rd term was going to expire, was arrested. Several other Ampatuans were arrested in the succeeding weeks.

But still, the rule of law still has to be promulgated in this case. Slow procedures in the justice system, the perpetrators have not been convicted with finality.

The rule of men -- men who are above the law, people who are exempted from the elementary laws against killing, against massacre, and there are people in government who made such exception -- still prevails.

The sooner that this case is closed, that the perpetrators are convicted and given the maximum penalty, like being sent to the electric chair and electrocuted to death publicly, the clearer the signal that the current administration is serious in promulgating the rule of law.
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Sunday, November 21, 2010

This joke after Manny Pacquiao's victory over Margarito was shared to us by a fellow UP alumni, LAR. It is said to have been a "viral" posting in facebook.

Manny "Pacman" Pacquiao will build a university in his province. He will name it Pacman University, also known as Pac U. The students will soon be known as Pacquers and the school administrator will be Mommy Dionesia, Mother Pacquer for short.

Many Filipinos are notorious for inventing funny jokes, like the above. Here are additions, invented by LAR himself:

1) Academy of Social Sciences at Pacman U. — ASS PAC U

2) Pacman U's new Mechanical Engineering — PAC U n ME

3) Pacman ALumni Liason Office at the University -- PAC ALL Of U

Name game jokes: Dialogue between Manny and wife Jinky:

Jinky: Manny, for our next child, what would be a good name?Manny: Let's combine our name: MANKY! hehehe.

Mommy Dionesia enters: Manny, can you also include my name to your new child's name?Manny: Sure Mama. Have a name?Mommy Dionesia: I got a good name... DIOMANJI! (Dionesia-Manny-Jinky)

Mexicans' disappointment: The Mexicans have ran out of top boxer bets to topple Pacquiao from the ring. They've sent all their best boxers to knock down Pacquiao, but they all lost. So Mexicans will send their last bet -- Zorro.

Finally, the Gayweather dillemma: should he run or should he quit boxing? Ahh, Gayweater, the appropriate name for that boxer :-)

If government bureaucrats and politicians can also have good sense of humor, at least they can pacify disappointed taxpayers.